NEW DELHI -- Integration throughout the
downstream value chain is essential if global players want to
compete with future US facilities, according to Dr. Ajit
Sapre, head of research and technology for private Indian refiner Reliance
Industries.

Sapre, who
delivered the keynote address Thursday at the International Refining and Petrochemical Conference (IRPC),
referred to shale gas as a game changer in North
America, noting that the advantage of cheap ethane feedstock appears unlikely to change
anytime soon.

As a result, for companies such as Reliance that hope to
compete on the global scene, it is critical to integrate
wherever possible.

Dr. Sapre noted that profitability cycles for petrochemical
plants and refineries are often different. For example, the petrochemicals cycle of
profitability repeats every seven to 10 years, he said.

Operating rates and profits are high when supply meets
demand, Dr. Sapre said. Additional capacity buildup
then leads to lower operating rates and margins drop. That is,
until supply meets demand, and everyone wants to build new
plants.

On the other hand, refinery profitability depends on
crude oil prices, giving it a differently-timed cycle.

Since the cycles are generally out of sync, the
integration of refining and petrochemicals adds profitability
and stability to your business, Dr. Sapre said.

Future ethane-based US facilities will use feedstock from an adjacent refinery
for three units, he explained: a steam cracker, an aromatics
complex and a gasification syngas plant, he explained. Then,
the syngas plant provides fuel oil and fuel gas for the
refinery.

For non-US producers, there are several potential
integration types to consider. The first is process
integration, which means innovative designs of downstream
petrochemical plants. The second is utility integration, which includes heat,
hydrogen, water, steam and electricity. The third and final is
the treatment of fuel gas, such as utilizing the hydrogen and
hydrocarbons present in fuel gas petrochemical feedstock.

By region, the Middle East is the best positioned to execute
that plan based on its newer facilities, Dr. Sapre said.
Meanwhile, Western Europe sites, which are more
specialized, could struggle the most.

The integrated approach provides synergies and gives
the ability to hedge market risk, he said. The
Middle East is clearly the most advantaged based on feedstock,
while Western Europe probably the least. Leaders
in the industry need to survive through the market cycles.

Low-cost importers and integrated players will run
hard, while specialized companies are more likely subject to
shocks, he added.

One strategy is to co-locate facilities at major hubs, he
explained, with one example being Singapores Jurong
Island. Key companies there include BASF, BP, Celanese, EM,
DuPont, Mitsui Chemicals, Chevron Oronite, Shell and Sumitomo
Chemical.

By co-locating, companies can save as much as 15% on
logistics costs, Dr. Sapre said.

Another international facility that could thrive in the new
era is Reliances Jamnagar super site in India, which is the worlds
largest refinery, he said.

Referring to Jamnagar as the crown jewel of his
companys portfolio, he noted that it has two of the
largest fluid catalytic crackers (FCCs) in the world, which
provide cheap feedstock for petrochemicals.

The offgas gives feed for a gas cracker, naphtha offers feed
to the aromatics complex, propylene supplies feed for a
polypropylene plant, and a mix of C4s serves as feed for the
alkylation unit.

Given demand, FCCs are becoming more and more a
machine to make downstream products than for gasoline, he
said.

Reliance is also undertaking a massive refinery petcoke
gasification project at Jamnagar, seeking an even
deeper integration.

Were on path to become a bottomless and
ultra-clean refinery, he said. Its the
largest petcoke gasification project in the world.

The project is driven by a desire for
energy self-sufficiency, he said, with syngas competitive with
natural gas.

As other panelists explained this week, the
US ethane advantage is making it tougher for international
companies such as Reliance to compete on the global scene. Dr.
Sapre seemed to concur with that assessment, predicting the US
to become a major petrochemical exporter in the coming
years.

However, the Reliance executive is confident that his
companys integration strategy will keep it
competitive.

We own and operate the worlds largest refinery complex [at
Jamnagar], he said. We have a top 10 global ranking
[in integration]. Were moving from
a regional to a global leader.

Stay tuned to HydrocarbonProcessing.com for further IRPC
coverage, including ourrunning blogwith news
stories, images and videos.

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Excellent Presentation by Dr. Sapre on Indian Capability of establishing world class Refinery cum Petrochemicals at Jamanagar .It is commendable to operate worlds largest Refinery at single location DR ANAND HALGERI

Stelio Carrasquel07.16.2013

Venezuela used this concept since the 1950. In 1990 1991 the Master Plan for the development of "Jose Petrochimical Complex" conceptualized the centralization of Methan-Ethane feeds and services (electricity, fuel gas, industrial water, etc.) supplied by the national petrochimal company as the bases for development of primary plants by the private and goverment industries, capables of generating by the private sector all other secondary and satelite plants fed by the products of the initial plants. Eventually part of that infrastructure was used for locating 5 crude oil upgraders.